I recently saw a question asked on the Internet from a person who was concerned about his company' s matching contribution in his retirement plan being in company stock. He was anxious (or is that an understatement?) about his company becoming the next Enron.

This is a common question today and it doesn’t simply apply because of the Enron debacle. Unless you've spent the last two years on Mars or watching Sponge Bob Square Pants, you know that equities have been struggling (another understatement?) and those employees of solid, reputable companies are worried about their stake in the company's stock. So, what can you do?

The first thing is to determine exactly what your exposure is. What you want to do is to tailor your 401(k) portfolio to meet whatever your risk tolerance is coupled with the time you have until retirement as well as a number of other factors. Most financial gurus today will advise that if you have more than 10 percent of your investments in company stock, you may want to cut this back. There are programs on the market such as Morningstar ClearFuture that will enable you to get a recommendation of what kind of allocation your portfolio should have based upon your age, time before retirement, and risk tolerance.

If you simply own way too much company stock in your retirement plan, the best thing may be to bring that back to a reasonable level by shifting money to other mutual funds. It's a case of shifting entities, so to speak, to get the best balance. You can move from stock funds to bond funds and from funds that occupy the same style box as the company stock to other fund options. For example, if your company stock is large growth and you have no large growth fund on which to scale back, you can still lower your risk exposure by allocating assets to other value-oriented and smaller-cap funds.

One financial planner I respect highly has an even more interesting concept. If you want to reduce your company stake as a percentage of your retirement plan but you can't sell the stock, then he advises that you simply invest more in your plan overall. The point here is that whatever you contribute beyond the employer matching contribution will actually serve to water down the percentage in company stock.

Clearly, you need to stay on top of what's happening to your money today. And that's another big understatement. For instance, one major investment company recommends that an investor in a company's 401(k) plan for age 60 and over has a 20 percent allocation each of money in growth, blend, value, income, and capital preservation stocks. They say that this reflects optimal contributions of assets, considering the time horizon remaining to age 65, historical inflation rates and risks, and return relationships of the asset classes. When comparing any suggestions to your own situation, consider your other assets, income and investments such as the equity in your home, other retirement plans, IRA assets, and your savings, not to mention that plan account.

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